Bollinger BandWidth USD - 61,111

Bollinger BandWidth is an
indicator derived from Bollinger Bands. In his book, Bollinger on Bollinger
Bands, John Bollinger refers to Bollinger BandWidth as one of two indicators
that can be derived from Bollinger Bands. The other indicator is %B.

BandWidth measures the percentage
difference between the upper band and the lower band. BandWidth decreases as
Bollinger Bands narrow and increases as Bollinger Bands widen. Because
Bollinger Bands are based on the standard deviation, falling BandWidth reflects
decreasing volatility and rising BandWidth reflects increasing volatility

Narrow BandWidth is relative.
BandWidth values should be gauged relative to prior BandWidth values over a
period of time. It is important to get a good look-back period to define
BandWidth range for a particular ETF, index or stock.

Bollinger BandWidth is best known
for identifying The Squeeze. This occurs when volatility falls to a very low
level, as evidenced by the narrowing bands. The upper and lower bands are based
on the standard deviation, which is a measure of volatility. The bands narrow
as price flattens or moves within a relatively narrow range. The theory is that
periods of low volatility are followed by periods of high volatility.
Relatively narrow BandWidth (a.k.a. the Squeeze) can foreshadow a significant
advance or decline. After a Squeeze, a price surge and subsequent band break
signal the start of a new move. A new advance starts with a Squeeze and
subsequent break above the upper band. A new decline starts with a Squeeze and
subsequent break below the lower band.

The BandWidth
indicator can be used to identify the Bollinger Band Squeeze. This free forex signals chartists to prepare for a move, but direction
depends on the subsequent band break. A squeeze followed by a break above the
upper band is bullish forex
signals , while a squeeze followed by a break below the
lower band is bearish. Be careful of head-fakes however. Sometimes the first
break fails to hold as prices reverse the other way. Strong breaks hold and
seldom look back. An upside breakout followed by an immediate pullback should
serve as a warning.

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